The sales Director of Sputnik Co. suggests that certain terms be modified. He estimates the following...

 

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The sales Director of Sputnik Co. suggests that certain terms be modified. He estimates the following effects: Sales will increase by at least 20% Accounts receivable turnover will be reduced to 8 times from the present turnover of 10 times. Bad debts, now at 1% of sales will increase to 1.5%. sales before the proposed changes is at p900,000 variable cost ratio is 55% and the desired rate of return is 20%. Fixed expenses amount to P150,000. You as the Financial Controller of the company allow the revision of its credit terms because losses will be reduced by The sales Director of Sputnik Co. suggests that certain terms be modified. He estimates the following effects: Sales will increase by at least 20% Accounts receivable turnover will be reduced to 8 times from the present turnover of 10 times. Bad debts, now at 1% of sales will increase to 1.5%. sales before the proposed changes is at p900,000 variable cost ratio is 55% and the desired rate of return is 20%. Fixed expenses amount to P150,000. You as the Financial Controller of the company allow the revision of its credit terms because losses will be reduced by